Acting Gov. Richard Codey unveiled the $27.4 billion proposed state budget last week, vowing to rein in spending and restore responsibility to the governorship.
In a speech introducing the budget, Codey promised to take aim at the root of the structural deficit and to reverse the trend of fiscal gimmicks. This budget calls for the largest reduction in government spending in the state’s history, but Codey promised the budget would not be balanced on the backs of the state’s most vulnerable citizens.
“Our state is facing a fiscal crisis,” Codey said. “It is a crisis that has been building for the better part of the last 20 years. It can’t be solved in one year or even in the next few years. But it can no longer be avoided.”
Codey said state government chose to increase spending during the flush times of the 1990s stock market boom. To gain immediate political benefits, the state took on new long-term obligations.
“Then, the stock market fell and our economy suffered under the impact of the Sept. 11 attacks,” Codey said. “Revenues crashed. In 2002, revenue was off by $3 billion. But even though revenue dropped, the state was committed to spending levels that could only be supported in the best of economic times.”
The state, of course, attempted to temporarily replace the revenue loss with one-shot revenues while waiting for the economy to recover.
“And that brings us to today,” Codey said. “We confront a budget that is the direct result of years of spending levels that couldn’t and cannot be sustained… today we are left with painful choices that no one wants to make.”
Codey said that 75 cents out of every dollar is handed over to someone else.
“Every year, more than $20 billion is given to towns, school districts, hospitals and universities,” Codey said. “It is awfully hard to cut your expenses when you give away the majority of your revenue.”
In 2005 fiscal year budget, which ends this June 30, the state spent $28.3 billion.
“But nearly $3 billion of that was [from] one-time revenue, revenue that we had last year but do not have this year,” Codey said. “Just to fund last year’s budget, we need more than $3 billion in new revenues. And that’s before we spend a dime on any new programs.”
He said even existing programs’ costs rise yearly.
“We must fund the annual increases in mandatory entitlement costs,” he said. “Some costs are health care, some are salary, some are retirement, and some are court-ordered, but none can be avoided.”
These include:
* $160 million more in salary increases for state workers and college employees.
* $300 million in additional Medicaid costs, most federal mandates.
* $90 million more in increased health care cost to support the free medical benefits for retired teachers and school employees.
* $120 million more in health care costs for current state and college employees.
* $50 million more in health care costs for retired state workers and college employees.
* $100 million more in increased school construction debt service costs.
* $55 million in additional court-ordered funding for child welfare reform.
To help put an end to spending without adequate matching revenue, Codey said he would not sign any legislation that enhances retirement benefits or increased pension costs unless there is clear additional revenue for them.
Codey said this year’s budget cuts more than $1 billion in spending, the largest spending cut in the history of the state.
“For the first time in years, there is zero borrowing to cover operating costs,” he said. “The use of one-time revenues is cut by 70 percent. Spending on state government is virtually frozen. Out-of-state travel has been prohibited. Funding for the office of the governor is cut by 10 percent. Funding for the office of each cabinet member is cut by 10 percent. Agencies have been directed to evaluate the effectiveness of every program.”
Codey said those programs that cannot demonstrate proven results will be eliminated or consolidated.
“The size of government will shrink, and at least 500 jobs will be eliminated without resorting to layoffs,” he said
In response to the budget speech, state legislators from Hudson County made comments.
“The message we heard today was one of unvarnished honesty,” said Sen. Joseph Doria (D-31st Dist.), a member of the Senate Budget and Appropriations Committee. “Acting Governor Codey made it clear that the days of one-shot budget solutions and fiscal sleight of hand are over in New Jersey. The hard reality is that, if we want the government to maintain the services that New Jerseyans have come to expect, we have to pay for them. State government must learn to live within its means, but the same time, it must find a way to give municipalities and local residents some genuine relief from the burden of property taxes. This will be a tough budget to sell, and it will be a tough budget to take. But in the long run, if we’re going to restore a sense of fiscal sanity to New Jersey and produce a truly balanced budget, this is the sort of discussion we need to have.”
Others were concerned about reductions to Homestead Rebates and the NJ Saver program for senior citizens. Under the budget proposal, the Saver program would be eliminated for a least one year and the top check for the elderly and disabled under the Homestead program would drop from $1,200 to $800.
Contact Al Sullivan at asullivan@hudsonreporter.com